Ikea plans to spend 300 million euros in South Korea to win market share

Swedish furniture maker Ikea plans to spend about 300 million euros (S$437.3 million) in South Korea over the next three years to increase market share in the Asian country. 

“We are investing a lot in Asia,” Tolga Oncu, head of the company’s retail Ingka Group, said in an interview in Goyang city on Saturday (Mar 16) on his first visit to the country since 2018. The group will open another so-called blue box store in Seoul and is considering “many more smaller formats”.

Ikea, known for its do-it-yourself business model, has four outlets in South Korea, and offers online shopping and delivery. The company is seeking to increase consumers’ access to stores, Oncu said. 

“Maybe you don’t need to walk more than 15 minutes to get your products in a convenience store or somewhere,” he said.

Ikea has in recent years invested on improving automation of its shipping service, which can lead to lower prices, he said. “Korea has one of the highest quality of last-mile deliveries,” he said.

The brand is planning to cut prices globally, and is looking at 10 to 20 per cent reductions for key products in South Korea, he said. In the US, Ikea has lowered retail costs on almost 1,000 products.

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“I think in general for Ikea worldwide, it is looking like this is going to be one of the biggest price reductions that we have ever done in one year,” he said.

Ikea earned 600 billion won (S$603.1 million) revenue in South Korea between Sep 1, 2022, and Aug 31, 2023, down from 622 billion won a year earlier, according to its financial report in December. Operating profit for the year plunged to 2.59 billion won from 21.8 billion won. BLOOMBERG